Mortgage Market Briefing – November 2019

Homeowners who took out a mortgage at the most recent market low may now be looking to remortgage to avoid seeing their monthly repayments spike, according to Moneyfacts.

Many borrowers were tempted to remortgage in the autumn of 2017 when mortgage rates hit historic lows. With these two-year terms now expiring, financial services analysts, Moneyfacts has said that customers may well switch their loan to avoid seeing repayments increase substantially.

The average rate in October 2017 was 2.2%. One month later and that had risen to 2.33% after the Bank of England increased the base rate from 0.25% to 0.50%. Since then, borrowers have had to contend with higher interest rates.

These deals are now maturing and the typical borrower will revert to a standard variable rate (SVR) of 4.9%. This is substantially higher than new fixed rate deals on the market today.

Despite this potential pitfall, new borrowing remains relatively cheap by historic standards. 

 This has helped activity in the mortgage market grow in recent months. Figures published by trade body, UK Finance, found that there were 29,100 new first-time buyer mortgages completed during September 2019. This is 1.6% more than the same month in 2018.

There were 29,050 homemover mortgages completed in the month, up 1.8% year-on-year. The remortgage market also saw a similar boost. The number of remortgages with additional borrowing was up by 5.9% to 17,740 while the number of pound-for-pound remortgages grew by 8% to reach 19,140 in the month.

However, the slowdown in the buy-to-let market continued once again in September. There were 5,500 new buy-to-let purchase deals completed in the month, 3.5% fewer than the previous year. Meanwhile, the number of buy-to-let remortgages was flat with 12,900 in September.

Much like the buy-to-let market, property prices have been relatively flat, according to the Your Move house price index.

The average property in England and Wales is now worth £299,047 following a 0.4% decline in the 12 months to September 2019. The growth rate was flat compared to the previous month.

Prices in London fell for the twelfth successive month, although some areas, such as Hackney, reached record prices thanks to the number of popular new build properties coming onto the market.

Overall, the capital’s property market was a drag on the wider performance of the housing market, where the average price fell by 0.2% year-on-year. London continues to have the highest house prices in England and Wales, with an average value of £597,971 recorded this month.

Elsewhere, property values in the South East and the East of England fell faster during the last year, dropping 1% and 1.1% respectively.

However, other regions posted strong growth compared to a year ago. Houses in Wales increased in value by 2.5% in the last 12 months while the North West (1%) and North East (0.6%) also saw healthy growth.

Equity Release: Market Update

The UK’s ageing population has left a growing number of older homeowners looking to release equity from their properties.

The Equity Release Council, the industry trade body, announced new standards for its members in November. It claims that the updated guidelines are the largest change since the organisation was established in 2012. 

The council has enhanced its rules to provide greater consumer protections before they take out a loan.

Richard Sexton – Business Development Director, e.surv Chartered Surveyors

Sources:

https://moneyfacts.co.uk/news/mortgages/competition-on-five-year-fixed-rate-mortgages-intensifies/

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2019

https://www.santander.co.uk/uk/infodetail

https://www.ukfinance.org.uk/data-and-research/data/mortgages/lending-trends

About e.surv

e.surv is the UK’s largest valuation provider, directly employing over 600 residential surveyors across the UK, supported by a network of consultant valuers. The business is the largest distributor and manager of valuation instructions in the UK and is appointed as Panel Manager for more than 20 mortgage lenders and other entities with interests in residential property. The business also provides a number of private survey products direct to the home-buying public. e.surv is a subsidiary of LSL Property Services plc. For further information, see www.www.esurv.co.uk.